The Option Pit VIX Light Is Yellow: Volatility Is Going To Move.
Today, the Option Pit VIX Traffic Light went from red to yellow at the open.
We’ll be talking about the latest volatility and market movement during our live event tomorrow at 11 a.m. EST (you can access the event by clicking here, and I’ll send you another invite later this evening) …
As well as going over the five trades we gave out last Thursday …
And who knows, we just may be giving out another trade tomorrow (spoiler alert: we are) …
But for now, what you need to know is most yellow lights do not last long, but bring wild swings in volatility.
These swings could be up, they could be down.
The swings are often down, but today we saw a massive trade that is making me think it could be up …
Tomorrow I’ll get into a full breakdown of why the Option Pit VIX Light changed from red to yellow, and what the odds are that it could go green …
But today, I want to point out a giant trade that went up this morning.
Right after the open, a customer bought over 40,000 contracts of the VIX July 50-strike calls for $0.23, and sold the same number of the 65-strike calls at $0.08.
Net, the trader bought the 50-65 strike call spread, expiring on Wednesday morning, for $0.15.
This massive call spread is a sign that this trader is worried about the extreme near future, and is potentially looking for the VIX to blow off its top.
On the day, ALL of the biggest trades in VIX are call buys:
The lone call sale is the July 25’s where a customer was actually closing a winner.
What does all this paper crossing the line mean?
It means that Monday is not the day to fade the VIX, and maybe not Tuesday either.
In the past we have seen these big up days met with MASSIVE put-buying. However, that is not what we’re seeing happen today.
Instead, everyone is chasing calls.
This means that we have really strong odds for some follow-through from the VIX, at least on the open tomorrow.
I would be cautious, and spend my time trading VIX straddles and strangles, NOT just buying puts to fade the market.
I actually did a trade earlier today for my Volatility Edge program that I will walk through tomorrow, so keep a look out for that, or if you want the details of these trades as soon as they happen, you can become a member here.
Your Only Option,